To control costs, most conventional plans include specific maximums for expenses including paramedical services, vision care, major restorative dental, and orthodontics. Such restrictions may not be appropriate for business owners and executives who will then be out of pocket for amounts over these maximums. To pay for these expenses, a high wage earner would need to dedicate roughly double the amount of the expense from their personal income, since approximately half of their salary will go towards income taxes. In contrast, under an executive benefits plan these costs become a tax-deductible expense to the business, just like any other benefit.
Conventional plans sometimes provide the option of “cost plus” programs, where amounts outside of the normal contract terms can be separately funded and reimbursed. This option, while it can be cost effective, is most appropriate for emergency expenses as it carries with it several potential disadvantages. Cost plus claims require additional administrative steps for the executive, a separate cheque must be cut and sent to the insurer for the claim, and time delays are introduced into the process.
In contrast, a typical executive benefits plan administered by The Benefits Trust includes the following features:
– 100% coverage with no maximums.
– All claims are processed on the first submission without added administrative steps.
– The most tax-effective method of reimbursement for both the company and the individual executive.
This level of coverage can easily be introduced into a conventional plan design administered by The Benefits Trust.
Another flexible alternative is the addition of a health care spending account for the executive suite. Executive HSAs can be administered independently from the company group benefits plan and offer the same favourable tax treatment as a regular HSA, while allowing for reimbursement of items not covered under the conventional plan. Common expenses include executive medicals, corrective laser eye surgery, dental implants, and adult orthodontics, to name only a few. While this option requires separate submission of executive claims to the HSA administrator, it has the advantage of complete privacy for executive claims. In all other respects, the executives continue to participate in the company benefits plan on the same basis as other employees.
To find out more about setting up an executive benefits plan for your business, talk to your advisor or call us at 1-800-487-2993.
